“The investment grade category is helping Romania to be targeted by large investors, we need to prove that the economic growth will continue, that the political and legislative stability is real, Romanian entrepreneurs should understand that they have to grow, and banks should support this growth. We started to see much bigger companies looking at Romania, but they will not invest this year, maybe not even next year, but at least they will encourage opportunist investors to invest now in Romania,” Pop told M&A Outlook conference Thursday.
Last month, Standard & Poor’s Ratings Services upgraded Romania’s rating to BBB-, a notch above junk status, citing the fiscal consolidation and progress in reducing foreign debt. S&P raised its long- and short-term foreign and local currency sovereign credit ratings on Romania to ‘BBB-/A-3’ from ‘BB+/B’, while the outlook is stable.
S&P kept Romania’s ratings in the “junk” category–non-recommended for investments–since 2008, at the debut of the financial crisis.
The other major rating agencies, Fitch and Moody’s, also rate Romania in the investment grade category.
Pop said that, in his opinion, after Poland, Romania is the next investment destination in CEE Europe, and investors started to identify it as separated from Bulgaria.
Alina Stanciu Birsan, PeliFilip law firm partner, stated that the rating upgrade is a positive sign which might trigger higher access to cheaper financing on medium and long term.
On the other hand, investment fund representatives say that rating is less important in the decision regarding an acquisition, compared with the business’ profitability and growth perspectives.
Resource Partners and Abris Capital Partners were among the most active investment funds on the local market in the last two years.
According to EY data, Romania outranked Hungary in the top of the most attractive states for foreign investments in CEE in 2014, ranking third in the region, following Poland and the Czech Republic, and it might even reach the second position in 2015.
Foreign direct investment in Romania rose 26.7% on the year to EUR2.72 billion in 2013, the highest level in four years.